"Alan Hill, chairman of the Council on Environmental Quality, NOT YET DEAD," read the flyer advertising Hill's appearance at the University of Virginia Law School.

The sign hangs in Hill's office, and is a reminder of how some people view the council. Since it was created in 1970, the CEQ has been the president's in-house adviser on environmental policies. But with a president who has not placed a particularly high priority on environmental programs and a 70 percent staff cut over the past year, the CEQ has become almost invisible.

However, the antagonism that the administration's more visible environmental agencies--the Interior Department and the Environmental Protection Agency--have stirred up may provide the office with a new role now--chief administration peacemaker with the environmental groups.

Since fiscal 1981, the agency has endured a 72 percent budget cut and a reduction in its staff from 50 people to 15. Hill concedes that that has limited the CEQ's activities, but he said the office has learned to adjust.

"When we implemented the budget reductions last year," Hill said, "I went back to OMB [Office of Management and Budget] and said, 'Hey guys, this is fine. But as we have projects that are approved, I need your help to go out and get the expertise we need.' Part of the budget reduction, I know, was a reaction of the staff of OMB because the CEQ staff back then" failed to keep OMB appraised of its activities. "It was one of those--'ah ha, I've got you,' " Hill said, jabbing the air. "It's part of the bureaucratic war."

Yet Hill admits that it is not business as usual for CEQ. The cuts have meant a drastic reduction in the areas where the agency can venture forth. The office pretty much restricts itself to three major areas now--acid rain, global issues and the environmental assessment process.

The catchword in describing CEQ's approach to all three issues is "balance," interpreted by Hill as the need to "balance economic and environmental concerns."

Speaking on global environmental issues, Hill said, "I think there's quite a misperception abroad of the thrust of what we're trying to do, and that is to achieve some sort of balance." He said that whenever he is attending an international conference on the environment "one of the first questions that always comes up, over coffee or whatever else, is 'what the hell are you guys doing over there?' When we have our chance to tell our story, they say, 'Oh, well it doesn't come through that way.' "

Hill argues that "balance" is necessary in trying to tackle environmental problems that were created inadvertently before the nation adopted its "environmental ethic," during the 1970s. "Ten years ago we said, we've built these tall stacks, we're going to solve the local air quality problem. Well, the Canadians don't like what tall stacks have done"--contribute to the acid rain problem--"and I can understand that." Nonetheless, he said, 10 years ago taller stacks looked like an excellent solution.

"Balance" is also the key to describing CEQ's approach to the environmental assessment process, which Hill believes has gotten out of hand. The National Environmental Policy Act of 1970 (NEPA) requires federal agencies to submit a detailed statement on the environmental impact of any major federal action that would significantly affect the environment. About 1,200 environmental impact statements are completed annually. In addition, tens of thousands of environmental assessments--the step before that--are performed.

CEQ is revising its NEPA guidelines and expects to have a proposal out by June 15. The Forest Service has already revised its regulations and the Interior Department is in the process of doing that.

Hill said the idea is to focus environmental studies on major problems, and eliminate "minutiae" to reduce the number and size of the studies. "You're not going to see a dramatic reduction in the number of EISs done," but the changes could cut in about half the number of environmental assessments required, said Hill.

"In talking to the Forest Service, I said, 'Why don't you exclude that from the environmental assessment process?' They said, 'You mean we can do that?' In half an hour here one day, they eliminated probably 6,000 or 7,000 environmental assessments that they did annually," he said.

According to Hill, agencies have been allowed for the past two years to exclude numerous activities under NEPA, but many, particularly agency attorneys, "have been afraid to. They're afraid the public will beat them up."

And although he believes that the public will see the revisions as an attempt to strengthen the NEPA process if the changes are made in an open manner, he admits that fear of lawsuits may still be a problem. He also agrees that some people may be skeptical of the changes, particularly given the perception that the Reagan administration is soft on environmental offenders.

Hill naturally disagrees with that perception, but admits that it exists. And he also agrees with some congressional Republicans who suggest that CEQ may be an ideal office for building bridges to environmental groups.

Interior and EPA have angered environmentalists so much that any proposal "sends up red flags," said one staffer for a Republican congressman active in environmental issues. That staffer and a few others predicted that during the next year, the CEQ will spend a substantial amount of time trying to improve relations with environmentalists.

Hill agreed. "We are starting, or restarting, an outreach program with the environmental groups." CEQ's first big effort will be a meeting it is organizing where EPA officials will brief environmentalists on new Resource Conservation and Recovery Act regulations due out in about a month.

Hill added that the Reagan administration is "very honestly, seeking to find some issues where the administration and the environmental community can work together." He cited as an example barrier islands, where both camps oppose the use of federal funds for development.

Asked if administration officials were concerned about their environmental image, Hill said, "There is a concern. I'd be dishonest if I told you otherwise." He paused, then shrugged. "Everybody reads the polls."